About the best thing you can say about selling individual major medical insurance right now is that selling it is an exciting way to generate dental leads.
Wes Thompson is taking a different approach: He's started web-based store, Emerge.me, that now offers critical illness insurance and accident insurance. Eventually, he hopes to add hospital indemnity insurance.
In other words: Thompson has set up an exchange that highlights the supplemental health salad and the apple pie rather than the major medical hamburger.
By using the web to reach more prospects, simplify and speed up the sale process, he may be able to generate enough commission revenue to compensate for the fact that per-sale commissions are, naturally, lower than major medical commissions used to be, before everything went to heck.
Thompson has years of experience in individual product distribution. In the 1990s, he built an independent brokerage distribution system for Cigna's life division. In recent years, he was president of Sun Life Financial Inc.'s Wellesley Hills, Massachusetts-based U.S. division, where he got into employee benefits and voluntary benefits distribution.
He began to think harder about something unsettling: the holes in consumers' defenses against out-of-pocket health care expenses.
"More individuals are moving toward higher and higher deductibles," Thompson said in a recent interview. "Those out-of-pocket expenses have really translated into increasing debt.'
Here's a look at three opportunities Thompson sees in the growing coverage holes.
Thompson says many consumers need to understand how much health exposure they really face. (Photo: Thinkstock)
1. Helping consumers see the health care cost protection gaps
From the 1980s through the late 1990s, the big idea in U.S. health care cost management was to put the patients in the hands of a primary care gatekeeper.
The gatekeeper would get a capitation fee, or flat fee per month per patient served. In return, the gatekeeper would try to keep the patient healthy, and accept financial responsibility when the patient needed specialist care or hospital care.
That system broke down when patients erupted in fury over the idea of primary care physicians blocking their access to other health care providers.
Now, health plans focus on two major methods for controlling costs. One is shifting to narrower, more deeply discounted provider networks. The other is shifting more costs to the patients.
"That's been accelerating," Thompson said.
For consumers, one huge problem with that shift is that many have no idea what a deductible is, let alone what having a high deductible could mean for their health care spending.
Thompson sees that as an opportunity to win consumers over by helping them understand their coverage gaps.
The Emerge.me site includes a tool that uses information about what kinds of coverage consumers have and how they live to develop supplemental health product recommendations.
Thompson says consumers need to understand that the health protection gaps may aggravate retirement planning gaps. (Photo: Thinkstock)
2. Helping consumers think about retirement savings gaps
Thompson sees an opportunity for agents, brokers and others to help consumers understand both their health cost protection gaps make their retirement savings gaps worse.
Given how few members of Generation X or the baby boom generation have defined benefit pension plans, "there's already a strain on this cohort," Thompson said.
The possibility that families might have to blow what little they've saved on out-of-pocket health care costs makes a bad situation even worse, Thompson said.
Emerge.me itself does not currently offer retirement savings advice or products, but it does try to educate consumers about what medical emergencies could do to their savings.
Thompson thinks there's still room to improve how insurers offer gap-filler products to consumers. (Image: Thinkstock)
3. Digitizing the supplemental health sales process
Insurers have been trying to sell supplemental health products through agents and brokers, and through sections on websites that focus mainly on selling major medical products and other types of products.
But Thompson argued that traditional distribution methods have not done enough to make consumers aware of the products.
"They're not getting to the masses," Thompson said.
He's hoping that making the products the focus of an online marketplace will help expand consumer awareness.
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